OpenEdge Blog

Is the Increase in Kiosks Leading to a Cashless Future?

Last year, the internet was buzzing about the report that McDonald’s was planning to replace cashiers in 2,500 stores with self-service kiosks. While the report was partially correct regarding the plan to install self-service kiosks, McDonald’s quickly said that the installation of the kiosks was not going to eliminate any portion of their labor force.

Instead, McDonald’s installed the kiosks to speed up the ordering process and give people more control over customizing their food, while reducing opportunities for human error. The fast food giant added that the affected cashiers would be moved to other roles within the restaurants where it’s adding new jobs, such as table service. All the talk about McDonald’s kiosks revolved around the effect it would have on its employees and the customer experience and didn’t dive into a deeper subject - the impact kiosks have on payment methods.

Unlike the self-checkout kiosks at a number of grocery and big box stores, the kiosks installed at McDonald’s stores only accept electronic payments and do not offer the ability to pay with cash. An interesting study in kiosks for a cashless environment came from the New York City-based restaurant chain Shake Shack. In 2017, Shake Shack opened a new location in the Big Apple that did not accept cash. All customers were asked to place orders at self-service kiosks or via the Shake Shack app on their smart phones, both of which required a payment method other than cash. While the burger chain mentioned several reasons for this “experiment,” the resulting cashless environment was one of the driving factors. But the concept of the cashless restaurant was short-lived.

During the company’s earning conference call on May 3, Shake Shack CEO Randy Garutti announced that the restaurant chain had decided not to continue with a plan to run fully cashless restaurants. This announcement came only months after opening the first cashless location. “Some of the things we’ve clearly seen is that our guests often want to pay with cash,” Garutti said during the call.

While the idea of a cashless retail store or restaurant has not yet reached a critical mass, the desire of companies to explore this possibility is completely understandable once someone considers the cost to manage the cash flow process within a retail environment. Upon initial thought, the handling of cash doesn’t seem like it would/should be expensive, but upon further investigation, it turns out to be quite expensive.

The first variable to consider while contemplating this cash-handling equation is staff; cashiers to take care of the customer transaction – and how many cashiers are needed every shift? Also required: a manager to oversee the cashiers and all the individual transactions, as well as any back-office staff needed to manage the counting and balancing of all the cash transactions. Additionally, the back-office staff will need to prepare deposits and deliver the money to the bank. And at every stage, the cash needs to be sorted, counted, double-counted, recorded, strapped and organized; all of which takes time; time being the true cost of staff.

Beyond the cost of having this staff, (and let’s not forget about the cost of these employees’ benefit packages and other perks and costs) there is the cost associated with the equipment needed to manage cash handling. Coin wrappers, bill straps, deposit envelopes, bank bags and other supplies all add up. And then there is the subject of losses during the cash handling process; and then, and then, and then…

Clearly the point has been made - cash handling is time-consuming and expensive. The concept of Shake Shack opening a cashless restaurant was well-conceived and well-intentioned, but just a little ahead of its time. The question comes down to - how much ahead of its time?

In a 2016 survey posted on creditcards.com, 1,000 consumers were asked which payment form they prefer and the results were not surprising. Forty percent chose credit cards, thirty five percent selected debit cards and only eleven percent chose cash. The store type which had the largest percentage of cash use was fast food. The survey reported that thirty three percent of fast food transactions were cash.

It is obvious to even the casual observer that cash is a lot less popular than it once was, and many technological advancements have contributed to this fact. Self-service kiosks are growing in popularity - from parking lots to airports and are now making headway in the cash-heavy fast food industry. Just another brick in the pathway to a cashless future.